1. Field of the Invention
The present invention is directed systems and methods for tracking and managing historical investor and investor action data. More particularly, the present invention relates to systems of methods for analyzing the historical performance of investors and investor actions, and for using the analysis to generate recommendations for future action in accordance with preferences and objectives.
2. Description of the Related Art
For years, art reigned over science in the investment arena, as it still does in many firms. In the past several decades, however, more scientific approaches have emerged which generally use more modern technology to employ mathematical techniques. Institutions spend $50 billion each year on investment managers and research. Much of that is spent gathering corporate, industry and national economic data and then modeling that information to make recommendations to investors.
Nonetheless, this development has failed to create greater market efficiency and advisor agreement; instead, it has merely multiplied the number of different techniques and consequent opinions. One of the major drawbacks of these systems is that they require the average investor to select among a variety of usually complicated mathematical approaches. Another drawback of these systems is that their usefulness will vary over time as the market weighs the various economic factors differently. (For example, the decreased focus on “price-to-earnings” or “PE” ratios during the rapid climb of Internet stock prices.)
At the same time, more people have made investments in the stock market today than ever before. And more of those people are directly involved in managing their investments, merely consulting or altogether bypassing traditional brokers to make their own decisions and execute trades via online services and other “direct” brokerage services. Similarly, gaming or gambling sites, such as those facilitating the placing of bets on sports contests, are experiencing increased popularity. These trends have been accelerated by increases in these services, decrease in the price for these services, availability of necessary technology (such as Internet access) and investor familiarity with the market. Even more so, the trend associated with the stock market will be accelerated by the number of investment firm scandals, since another drawback of both traditional and more modern advice systems is that what brokers recommend to an investor and what they do for their own investments is not always the same thing.
While some inventions claim to assess total portfolio holdings and may have a partial benefit of looking at actions rather than mere recommendations, they have several other disadvantages eliminated by the present invention. Such disadvantages include limited numbers of investors for analysis, limited numbers of objects involved, and—in the case of the fund manager approach—a lack of sensitivity to the shifts in stock price caused by such institutional moves. An additional disadvantage avoided by the present invention is a portfolio-based approach for evaluation rather than a transaction-based approach, since the portfolio-based approach requires the subscriber to match an overall series of positions rather than evaluating single transactions. Still another disadvantage avoided by the present invention is a lack of sensitivity to changes over time provided by their backward-looking approach, since an equity held in a “model” portfolio may have increased in price since acquisition. Other disadvantages of these inventions, such as their lack of a mechanism for assessing what is defined here as user “confidence,” become increasingly apparent through the detailed description below.
Still other inventions claim to perform analysis of recommendations of a limited number of industry or media “experts.” In addition to the earlier stated disadvantage of being based simply on recommendations rather than transactions, such inventions have several other disadvantages eliminated by the present invention. Such disadvantages include absence of the millions of individual investors, absence of an aggregate transactional weighting factor for assessment (termed evaluation “conviction” in the present invention), limitation to pre-defined periods of time rather than continuous periods of time, limited numbers of objects involved in recommendations and vulnerability to external influences such as media coverage.
As a result, there remains a need for a system that is easier for the investor to understand and use and that is less vulnerable to the evolution of the market or the suspect motives of investment advisors.